Tue Aug 2nd, 2011 at 11:39:10 AM EST
Reading a rambling and not all that coherent article on the state of the global economy, I came across this interesting snippet:
Crash Club - what happens when three economies collide | Mike Davis | Comment is free | guardian.co.uk
In effect, a shadow banking system has arisen with big banks moving loans off their balance sheets into phony trust companies and thus evading official caps on total lending. Last week, Moody's reported that the Chinese banking system was concealing one-half-trillion dollars in problematic loans, mainly for municipal vanity projects. Another rating service warned that non-performing loans could constitute as much as 30% of bank portfolios.
Real-estate speculation, meanwhile, is vacuuming up domestic savings as urban families, faced with soaring home values, rush to invest in property before they are priced out of the market. (Sound familiar?) According to Business Week, residential housing investment now accounts for 9% of the gross domestic product, up from only 3.4% in 2003.
This is pretty alarming, because if China hits a financial crisis, then the heartening resilience of the developing world economies may come to an end - and we'll be looking at a worldwide recession.
Anyone have any sources on this, beyond the effortlessly unreliable Moodys?